BRITAIN’S bloated Department for International Development has squandered hundreds of millions of pounds by making reckless bets on the foreign exchange markets.

Chancellor George Osborne last year increased Britain’s aid budget by 37 per cent []

It lost £31million of frontline aid earmarked for the world’s poorest countries last year because it failed to insure against volatile currency movements.

Since 2009, it has seen its £3billion portfolio of overseas investments plunge by £264million – all because sterling moved the wrong way against the US dollar and the euro.

Last year the department paid five of its bosses £800,000, including £50,000 in bonuses.

Top earner was Minouche Shafik, who got £210,000 before she quit to join the International Monetary Fund in April. The details are in DFID’s annual accounts, which also reveal it has paid £8million in redundancies since 2009. The largest pay-off was about £275,000, enough to immunise thousands of babies in the poorest countries.

The department increased the budget of its Communications Division by 25 per cent to £38million last year.

Chancellor George Osborne last year increased Britain’s aid budget by 37 per cent

When asked about the findings, Conservative Development Secretary Andrew Mitchell said: “This is further evidence of the scandalously wasteful approach of the previous government.”

However, £8million of the “communications” spend is for David Cameron’s project to send gap year students overseas.

Chancellor George Osborne last year increased Britain’s aid budget by 37 per cent to £12.6billion by 2014. It represents £479 for every home in Britain, yet the department is plagued by waste.

According to the accounts, DFID has £3.1billion invested in eight international finance institutions. The investments are in US dollars or euros, which means that when sterling rises, the value of the foreign shares falls.

Banks and companies take out special insurance to protect such investments, but because the department failed to do that, it has had to dip into reserves to cover a £264million loss.

DFID insists this is a notional paper loss, but the National Audit Office warned a number of departments about a lack of precautions in February.

Announcing aid for Libya yesterday, Mr Mitchell said: “We have taken tough steps to ensure taxpayers’ money is well spent.”

The department refused a Freedom of Information request for internal audit reports, claiming it could jeopardise international relations.